Anthony Albanese spruiks virtues of safeguard mechanism and National Reconstruction Fund

Anthony Albanese says his government’s proposed safeguard mechanism will drive down emissions and is crucial for Australia’s diplomatic relations.

Anthony Albanese at the National Press Club in Canberra on Wednesday. Picture: NCA NewsWire / Gary Ramage

Anthony Albanese says his government’s proposed safeguard mechanism will drive down emissions and is crucial for Australia’s diplomatic relations, as he tries to win over the Greens and other Senate crossbenchers on key election commitments.

The Prime Minister used a major address to the National Press Club on Wednesday to defend two policies facing stiff resistance in the Senate: the overhauled safeguard mechanism and $15bn National Reconstruction Fund.

The Coalition is opposing both, meaning the government must gain support of the Greens and two Senate crossbenchers to pass the legislation.

Mr Albanese said his government’s emissions reduction target of 43 per cent “sent a message to the world about Australia returning to the ranks of responsible nat­ions” but the safeguard mech­an­ism was a “big part of the ‘how’ ” the country would achieve its goal.

“It will empower business and industry with the certainty and confidence to invest in reducing their emissions. Meaningful action on climate change is our environmental responsibility, but it is also central to our diplomatic strategy – and it represents a transformative economic opportunity,” he said.

Energy Minister Chris Bowen in January unveiled the government’s plans to reform the ­Coalition’s safeguard mechanism, which involves creation of a ­carbon-trading scheme for heavy industry with credits to be capped at $75 a tonne.

Under Labor’s proposal, due to start in July and capturing coalmines, gas fields, aluminium smelters and cement plants, 215 industrial facilities across the country would have to increase their emissions reductions.

Businesses that underperform on their reductions could offset emissions by buying carbon credits from industrial users ahead on their targets, or by purchasing Australian Carbon Credit Units ­issued by the government for ­carbon-abatement projects.

Mr Albanese also said the NRF would “help protect our economy from inflationary pressures” by boosting Australian manufacturing and ensuring the country was less exposed to global supply disruptions. “In the early days of the pandemic, people were shocked that Australia couldn’t make enough masks or PPE for our population. It showed the vulnerability of being the last link in the global supply chain,” he said.

“But the NRF is about more than helping us produce things at short notice in times of crisis – it’s about building a more resilient, more diversified economy, with more jobs in regional Australia.”

The Coalition on Wednesday said the Prime Minister and Jim Chalmers had not done the work to be able to say the NRF would not impact inflation, quoting government officials at Senate estimates who said there’d been no modelling conducted on its ­inflationary impact because it was unnecessary.